A special Government fund to provide loans to large developers is being proposed to help clear a logjam in the supply of much-needed family homes.

The Coalition is being asked to consider the new Strategic Infrastructure Fund which would be targeted at developments with more than 1,500 units.

Developers would be able to avail of loans at "competitive rates" under the plan, designed to boost cashflow into the construction sector and speed up building work.

It notes there is "virtually no funding" to buy sites or provide working capital, and that investment funds which hold land banks are "not willing to make up their mind".

The new fund would be based on the Large Sites Infrastructure Programme in the UK which was established in 2013 and offered €1bn in loan funding last year.

It is among a range of options in a paper, seen by the Irish Independent, put together following a meeting of groups including Nama, the Construction Industry Federation, the Department of Environment and Dublin local authorities.

The notion of a new fund for developers would prove politically controversial following the property crash. But one of the major challenges facing the sector in 2015 is accessing funds needed to complete large sites so that newly built family homes can come on stream.

Reducing the VAT rate on residential development to reduce building costs, and possibly eliminating development levies, are also being considered.

But it also cautions that the market is "in reality more fragile" than expected, particularly given the introduction of Central Bank mortgage lending rules which require first-time buyers to source 10pc of the property price before securing a mortgage.

The paper also says that building standards setting out minimum size and car parking spaces could also be making residential construction unviable, particularly for smaller units.

It says that 75pc of homes in Dublin City over the next decade are needed for households of three or fewer people.

Reducing building standards, such as eliminating the requirement for car parking and reducing the average size of units, could help reduce costs by 15pc.

If the Government waived development levies, and eliminated VAT on residential construction, it could result in an overall drop of 25pc.

The move comes as new data shows there are currently 187 sites across Dublin with planning permission in place for almost 27,000 units.

But it is understood that while there is sufficient land zoned for 95,000 units, almost 49,000 cannot be developed due to a lack of infrastructure.

In Fingal County Council there is permission for almost 16,000 homes. Dun Laoghaire Rathdown has 51 sites capable of providing just over 6,000 units; South Dublin County Council has 29 sites or 2,483 units and Dublin City 25 sites or 2,444 units.

But the State needs to invest as much as €165m in building roads and water treatment plants to free up land to build much-needed homes.

The Coalition will be forced to make tough decisions in its final Budget before the election as the Dublin local authorities warn that unless millions of euro are spent, valuable land banks cannot be developed.

This will result in prices continuing to rise, pricing families and first-time buyers out of the market.

The Society of Chartered Surveyors (SCS) says the Government recoups almost 20pc from the cost of building a house.